Nvidia's gaming GPU revenue just plummeted despite record results overall

Nvidia's latest financial results are in, and the AI and gaming GPU giant has unsurprisingly made vast sums of money in recent months. However, while it has seen growth in many areas, its revenue for gaming GPUs in the last three months actually dropped by 13% compared to the previous quarter.

While this might seem a surprising change in fortunes for the maker of the best graphics card chips in the world, there are two very clear reasons for this outcome.

Firstly, there's the reason that Nvidia discusses in its Q4 fiscal report, which is that the quarter before this one incorporated the holiday season, when consumer purchasing peaks. As Nvidia puts it, "channel inventory naturally moderated following a season of strong holiday demand." In other words, we've just had the January blues quarter.

The second reason would appear to be that the drop in demand has been exacerbated by the recent rise in graphics card prices, due to soaring RAM costs. As we reported last week, graphics card prices surged at the start of the year, but many consumers simply chose not to pay the higher prices, leading to poor sales and price drops.

As for the wider picture, Nvidia's gaming division is still doing numbers, with its $3.7 billion earned this quarter up 47% from a year ago, which Nvidia puts down to "strong Blackwell [RTX 5000 series] demand." Full-year earnings for gaming also hit a record $16.0 billion, which is a 41% increase on the previous year. Nvidia's gaming revenue incorporates gaming GPUs for desktop graphics cards, laptop GPUs, as well as its GeForce Now service.

For comparison, AMD's gaming division revenue last quarter was $843 million, meaning Nvidia's gaming-focused earnings were over four times greater than AMD's, despite AMD's figure representing a 50% year-over-year increase. What's more, AMD says this growth was "primarily driven by higher semi-custom revenue and strong demand for AMD Radeon GPUs," pointing to it being chips such as those for the Steam Deck and other gaming handhelds being behind a lot of that growth.

Back to Nvidia, and, unsurprisingly, the bulk of its earnings are now taken up by data center-focused sales. Its AI chips generated a record $62.3 billion this quarter, which is 22% higher than the previous quarter and 75% higher than a year ago. Of the company's full-year revenue of $215.9 billion, $193.7 billion of it was for data center chips.

What does this all mean for gaming PCs and their graphics cards? Well, nothing particularly good, unless Nvidia fancies redirecting some of that AI money towards subsidizing gaming GPU prices. Hint hint.